Health Canada has proposed amendments to the Food and Drug Regulations that would make it easier for drug companies to get authorization to produce generic versions of brand name drugs.
The amendments would allow Health Canada to more quickly to approve generic drug applications that have the same active ingredients as their brand name equivalent but in a different form, as long as the generic still produces the same effect at the same dose.
The changes would simplify the approval process for those generics, allowing drug companies to apply through an abbreviated submission process. However, the amendments wouldn’t apply to companies submitting a biosimilar.
Drug companies will still be required to prove ingredients are equivalent to the brand name drug and that their version is safe to ingest.
“We need to explore all options for lowering drug costs for Canadians as we improve access to safe medications and medical devices,” said Minister of Health Ginette Petitpas Taylor in a statement. “These changes will allow greater flexibility for generics — and contribute to our goal of improving affordability.”
Health Canada said it expects about three per cent of generic drug applications will initially use the new approach.
Chris Goguen, manager of pharmacy benefit strategy at Medavie Blue Cross, says the insurer considers the changes a positive development. They would increase access to a wider range of safe and affordable generic drugs over time and possibly resolve “inconsistencies in the generic space,” he says. Provinces have the responsibility to determine whether a generic can be considered interchangeable with the brand name version and don’t always come to the same conclusion, he notes.
“In cases where there are different ingredients or salts [in the generic drug], interchangeable status has not been consistently considered,” says Goguen. “For a private carrier, with members across the country, you could end up with different coverage.”
Looking at all of Medavie’s group plans, he says drugs make up 65 per cent of overall health benefits spending, though he notes it’s still too difficult to predict what costs savings plan sponsors could see from the changes.
According to Health Canada, generic drugs make up almost three-quarters of the medications dispensed but only about a quarter of drug expenses in Canada. For Medavie, generics make up two-thirds of the claims it reimburses but only 30 per cent of its total drug expenditure.
Plan sponsors are already benefitting from the pan-Canadian Pharmaceutical Alliance, which reduced the prices of nearly 70 of the most commonly prescribed drugs by 25 to 40 per cent in April 2018. Goguen says Medavie has seen the overall drug spend cooling off in the last 24 months, particularly in the wake of the change.
However, newer specialty drugs, particularly biologics and cancer drugs, are making up an increasing portion of drug spends, he says. “Higher-cost drugs and specialty drugs, which for us is any drug that costs more than $10,000 per patient per year, are increasingly becoming more and more common. The availability of generics to create headroom in the plan is very important.”